Tanzanian Energy Regulator Considering Bids for Power Plants

March 5 (Bloomberg) -- Tanzania’s energy regulator said
it’s considering expressions of interest from two companies to
each build a 200-megawatt gas-fired power plant that will help
reduce an energy deficit in the East African nation.

BS Ltd., based in Hyderabad, India, and Kamal Steel Ltd., a
closely held Tanzanian metal manufacturer, may build plants at
Bagamoyo, about 60 kilometers (37 miles) northwest of the
commercial capital, Dar es Salaam, Energy and Water Utilities
Regulatory Authority Director-General Felix Ngamlagosi said in a
Feb. 28 interview. The companies are among “several other
companies that are interested in developing small power
projects,” he said.

Tanzania, East Africa’s second-biggest economy, plans to
more than double electricity production during the next four
years by building at least four power plants including the 600-megawatt, coal-fired Mchuchuma facility, according to the
regulator. Only 18 percent of Tanzanians have access to the
electricity grid, which the country plans to increase to 30
percent by next year, the regulator said on its website. One
megawatt is enough to power about 2,000 average European homes.

Power supply in the country is monopolized by the state-run
Tanzania National Electric Supply Co., which carries out
generation, transmission and distribution. Independent power
producers including London-based Aggreko Plc and Washington,
D.C.-based Symbion Power LLC also sell electricity to the
utility.

Power Costs

The introduction of new plants will help reduce electricity
costs, Ngamlagosi said. The average price of power in Tanzania
is $0.17 per kilowatt hour, according to the regulator. That
compares with an average of $0.14 per kilowatt hour for the
African continent and $0.07 in East Asia, according to African
Development Bank data.

“We are sure the price of electricity will slow down but
this would depend on the economics of the pipeline project and
the associated power plants,” Ngamlagosi said. Tanzania expects
to complete construction of a gas pipeline to the port town of
Mtwara that will feed the 240-megawatt Kinyerezi plant by the
end of this year.

The government may also consider subsidizing solar-power
production after its completed a policy paper on the alternative
energy source, Ngamlagosi said.

Tanzania ranks as Africa’s biggest gold producer after
South Africa and Ghana, according to the latest data on the U.S.
Geological Survey’s website. The country is also the world’s
only producer of tanzanite, a gem mined at the foot of Mount
Kilimanjaro. Companies including London-based African Barrick
Gold Plc and Tanzanian Royalty Exploration Corp. of Canada have
operations in the country.

Tanzania is also preparing a framework for private
investment in the water industry, using a public-private
partnership model, Ngamlagosi said. The government announced
last year it has been in talks since March 2013 with Kadima,
Israel-based IDE Technologies Ltd., one of the world’s three
largest manufacturers of desalination plants, about a potential
project in Dar es Salaam.

The country plans to provide universal access to safe
drinking water by 2025.